How does this extension benefit you? You would still be able to invest in property in high-density areas such as Lisbon, Porto, and the Algarve, as well as coastal towns like Setubal and the Silver Coast up until 31 December 2021. The capital transfers investment values will also not increase as planned until 1 January 2022.
The golden visa
Going back quite some years now to 2008 – Portugal, and the world, were going through a very different kind of crisis. The global financial crisis hit us all hard, and left countries struggling with how to manage the situation for the benefit of their economies and their populations. Portugal was already in the grip of a recession that began in 2003 and would only be made worse by these new financial woes. Alongside the far-reaching austerity measures that were put in place, the government needed to create fiscal stimulus and encourage investment from outside of the country.
One of the most successful methods implemented has been the ‘golden visa’, which offers residence in Portugal through investment. The scheme has been responsible for collecting almost €6 billion since its inception in 2012. The Portuguese economy overall has seen very strong growth in recent years, in part due to the relaxation of austerity and to the general strong financial performance of Europe as a whole – but this recovery is now threatened by the long-term effects of the COVID-19 pandemic.
Anybody who lives outside of the EU/EEA/Switzerland can apply provided they have no criminal record. They will be required to do one of the following: invest in either real estate or a venture capital fund, transfer a large amount of capital, form a company and create 5 new jobs, or donate money to the state for research or national heritage.
Of all the qualification methods, investment in real estate has been far and away the most popular. This currently requires applicants to buy property anywhere in Portugal for €500,000 in high density areas, or €400,000 in low density areas.
The proposed changes for 2022 mean that you will no longer be able to buy residential property in high density areas such as Lisbon, Porto and the Algarve.
In terms of qualifying through investment, €350,000 placed in a fund will secure your application at present, but this amount is due to rise to €500,000 under the new rulings. These same figures will also be true for investment in research and development, and also for anyone intending to start a business. If you intend to transfer capital from outside Portugal in order to qualify, this is set to increase from €1 million to €1.5 million Euros as of 1 January next year.
The golden visa scheme is more formally known as the residence permit for investment activity (ARI). This gives individuals outside of the EU the ability to apply for Portuguese citizenship after 5 years of their investment without having to reside in Portugal permanently. During the intervening years, their residence permit will allow them visa-free access to other Schengen states and the right to live and work in Portugal, although there is no obligation to do so. Applicants are also eligible to include members of their immediate family on the same visa application, which makes it a great opportunity for giving the whole family a new start in such a beautiful part of the world.
There are no tax implications for applicants to the scheme, unless you chose to spend more than 183 days of the year in the country, in which case you would then be classed as a tax resident. If that is the case there are benefits to be had through the non-habitual residency (NHR) programme, which can offer tax exemption for your first 10 years of residence.
If you are thinking of taking advantage of the golden visa scheme, then now is a good time to set the wheels in motion to qualify before the proposed changes take effect. The good news is that anyone who submits their application before 1 January 2022 will still be able to benefit from the terms of application as they are now, which stands to save them a substantial amount of money. If you would like to discuss anything with regards to relocating to Portugal and the implications for your finances or your tax liability, please get in contact with me to discuss the best options for you.
Blacktower Financial Management has been providing expert, localised, wealth management advice in Portugal for the last 20 years. We can help with specialist, independent advice on securing your financial future. Get in touch with us on +351 289 355 685 or email us at email@example.com.